TaxTMI 
TaxTMI 
Valuation of second hand machinery
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....e circular also states that there is no need to specify the agencies whose certificates alone would be accepted. It has been ascertained from field formations that the present practice in this regard is that if an importer produces a chartered engineer's appraisement report issued at the load port, with the ingredients indicated in para 8 (a) of the circular 4/2008-Cus, the same is being accepted by Custom Houses. Also, appraisement /inspection reports prepared by pre-shipment inspection agencies in India, which have been notified by DGFT, are also being accepted by the Custom Houses. However, if the report produced by the importer does not contain information mandated in the circular 4/2008-Cus dated 12th February 2008, the importer is advised to select any chartered engineer, empaneled by the Custom House, for inspection / appraisement of the second hand machinery. In this regard, consultations have also been held with DGFT, DIPP, Trade Associations (CII, FICCI, ASSOCHAM, BCHAA and others) 2. After due consideration of the suggestions and concerns put forth the Board has decided to issue the following guidelines for valuation of imports of second hand machinery: 3. Wher....
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..... 8. It follows that in cases where used capital goods cannot be appraised under Rule 3, and where there may be difficulty in applying Rules 4 to 8 of the CVR, 2007, the proper officer may be required to apply the residual method under Rule 9 so as to factor condition, depreciation, refurbishment, charges of disassembly & packing and any expenses incurred by way of pre-shipment inspection agency charges etc 9. Given the nature of challenges in computing the value of second hand machinery under Rule 9. and the need to ensure that the approach applied reflects commercial reality and results in a value which is fair, and is arrived through uniform processes by all custom houses, it is felt that it is necessary to obtain inspection / appraisement reports from qualified neutral parties. 10. For this purpose, the Board has decided that Inspection /Appraisement Reports issued by Chartered Engineers, or their equivalent, based in the country of sale of the second hand machinery shall be accepted by all Custom Houses. For the purposes of uniformity, the format in which inspection/appraisement reports shall be prepared by the Chartered Engineer is annexed to this circular. In the ev....
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....son, Rule 12 of the CVR, 2007 requires that the proper officer shall seek an explanation from the importer justifying the declared value. The proper officer may then evaluate the evidence put forth by the importer and after giving due consideration to factors such as depreciation, refurbishment or reconditioning (if any), and condition of the goods, determine whether the declared transaction value conforms to Rule 3 of CVR, 2007. Otherwise, the proper officer may proceed to determine the value of the goods, sequentially, in terms of rule 4 to 9. 13. This circular supersedes circular 4/2008-Cus dated 12th February 2008. 14. Any difficulty in the implementation of the foregoing guidelines may be brought to the notice of the Board. Yours faithfully, (S. Kumar) Commissioner (Cus & EP) Phone: 011-2309 2080 Fax: 011-2309 4432 ============= Document 1 Form B (Refer Para 12(e) of Circular No. 25/2015 dated 15th October 2015 [On the letter Head of the Chartered Engineer/firm if inspection report is issued in India] _(name of chartered engineer) hereby certify that I have carried out an inspection of dated issued by the used machinery cov....
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....al of the Inspecting Agency Signature Name of the Inspecting Person/Inspector_ Designation Address (office) E Mail Address Phone Number Instructions: 1. This certificate shall be presented before Indian Customs (by the importer of the second hand machine(s)) as a part of the import declaration under Customs Act, 1962, which is a legal declaration 2. The Chartered Engineer must enclose a copy of the certificate issued by the Institute of Chartered Engineers which qualifies him to perform such appraisement/inspection 3. Please attach a copy of the relevant notification of DGFT which notifies the firm for Pre- shipment Inspection in India (where applicable) Or, 4. Please attach copy of Customs House letter authorising you / your firm as an empanelled chartered engineer. Form A (Refer Para 12(b) of Circular No. 25/2015 dated 15th October 2015) [On the letter head of the Chartered Engineer/Firm or an equivalent entity in the country of sale] _(name of chartered engineer) hereby certify that I have carried out an inspection of dated issued by the used machinery covered under invoice no_ (name of company/f....